Bad News, Good Vibes - table - Industry Trend or Event - Statistical Data Included

Forget the weak earnings and the shaky economy: The Nasdaq has gained ground. But with little changed from a grim fourth quarter, some analysts wonder how long it'll last.

TROUBLED INVESTORS, listen up: You can't blame the Nasdaq for your woes this month. The volatile index last week was up as much as 28 percent from its cringe-inducing low point of 2252 on Jan. 3. The bounce follows an exceptionally weak fourth quarter, when the Nasdaq dropped 33 percent. The rally surprised many investors -- some of whom now wonder if it's finally safe to stop holding their breath.

Not just yet, analysts say. Signs that the Federal Reserve is keeping a watchful eye on the economy have driven most of the gains this month. Many investors are banking on a rate cut this week. But investors will have to wait out the spring -- with an eye to both Fed activity and earnings figures -- to better gauge the market's direction. Until then, tentative buying will continue.

"There's an old saying around Wall Street: The market often climbs a wall of worry," says Dick McCabe, chief market analyst at Merrill Lynch. "Eventually as it goes up, people tend to regain confidence."

But how much has really changed from the fourth quarter? While companies such as Compaq and Intel have delivered earnings above the numbers forecast by Wall Street analysts, many others, including Lucent and Dell, have weighed in with disappointing figures. And despite any rallies in the stock market, the IPO market remains all but dead.

Part of the rebound may come from a sense that investors were remarkably swift to sell on any hint of weakness. Among individual public companies, the worst performers in the fourth quarter lost almost all of their value. Five out of the 10 biggest stock losers have already been removed from the Nasdaq. And the big winners didn't even come close to balancing out the losers: When combined, the 10 best and worst performers lost an average of more than 45 percent of their value in the fourth quarter.

Only 22 Net-related IPOs braved the market in the fourth quarter. That's an enormous drop from the 90 IPOs a year before. So far in 2001, only one initial offering has debuted in any industry: Peet's Coffee & Tea, underwritten by W.R. Hambrecht, debuted Thursday at $8 a share, below the estimated price range of $10 to $12 a share. It closed its first day of trading up 17 percent.

Signs of further weakness are lingering. There have been 82 earnings warnings for the first quarter this year, up from 14 at this time last year, says Chuck Hill, director of research for First Call. And many companies remain cautious about their forecast for upcoming quarters.

This should remind investors that however fashionable optimism may be this month, a long and unpredictable road still lies ahead. "Very rarely do you get a 50 percent decline and then go running back up into a bull market," says McCabe. "There's usually a rebuilding period in between."

                  After a Bad Q4, Tech Stocks on the Mend
                FOURTH QUARTER 2000 STOCK INDEX PERFORMANCES
                          STANDARD 100 NASDAQ    DOW
Value Sept. 29, 2000         1,298     3,673  10,651
Valuc Dec. 29, 2000            565     2,471  16,787
% change in Q4                -56%      -33%      1%
% change in 2000              -78%      -39%      6%
Value Jan. 24, 2001            718     2,859  10,647
% change Sept. 29-Jan. 24     -45%      -22%      0%
SOURCE: THE STANDARD BASED ON BLOOMBERG DATA
                       IPO Machine Grinds to a Halt
                   MONTHLY INTERNET-RELATED IPO ACTIVITY
                           3Q99    4Q99   1Q00    2Q00   3Q00    4Q00
Net IPOs                    94      90     91      54     75      22
Net IPO dollar volume [*] $10,924 $8,089 $13,335 $7,437 $11,314 $7,737
(*.)IN MILLIONS. SOURCE: THE STANDARD BASED ON DATA FROM IPO.COM
                   Q4 Stock Gainers Don't Offset Losers
                    4Q00 LARGE-CAP NET STOCK PERFORMERS
Gainers
Innodata (INOD)                 81%
Fashionmail.com (FASH)          76%
Ramp Networks (RAMP)            66%
IDX Systems (IDXC)              58%
HeadHunter.net (HHNT)           55%
Losers
ZipLink (ZIPL)                -100%
Streamline.com (SLNE)         -100%
ResourcePhoenix.com (RPCX)     -98%
Homecom Communications (HCOM)  -97%
eToys (ETYS)                   -96%
AMONG NET COMPANIES WITH MARKET CAPS IN
EXCESS OF $1 BILLION ON DEC. 29, 2000.
SOURCE: THE STANDARD BASED ON BLOOMBERG DATA
                     Internet Deals Continue to Slide
                    QUARTERLY INTERNET M&A ACTIVITY [*]
                 NET DEALS AS A PERCENT OF TOTAL U.S. M&A
4Q99 1Q00 2Q00 3Q00 4Q00
 2%  36%   7%   2%   1%
(*.)INCLUDES ONLY THOSE TRANSACTIONS
WHERE ONE OF THE PARTIES INVOLVED WAS
AN INTERNET DESTINATION PURE-PLAY.
(**.)EXCLUDES AOL TIME WARNER.
SOURCE: THE STANDARD AND WEBMERGERS.COM
                   Networkers Keep Drawing Big VC Bucks
                TOP INTERNET VENTURE INVESTMENTS, 4Q00 [*]
                                          VALUE
RANK ANNOUNCED COMPANY                  (MILLIONS)
  1   Nov. 1   Pihana Pacific              $190
  2   Dec. 15  MarchFirst                  $150
  3   Oct. 31  Ionex Telecommunications    $150
  4   Oct. 10  Yipes Communications        $139
  5   Oct. 4   Tellme Networks             $125
  6   Dec. 5   Oxygen Media                $100
  7   Oct. 19  Jamcracker                  $100
  8   Dec. 7   Caspian Networks             $85
  9   Oct. 4   ConXion                      $84
 10   Oct. 31  Vivace Networks              $83
 11   Nov. 10  Bandwidth9                   $80
 12   Oct. 31  FusionOne                    $80
 13   Dec. 6   Cidera                       $75
 14   Dec. 6   Innovance Networks           $75
 15   Nov. 29  United Messaging             $70
(*.)SINGLE-ROUND TOTALS.
SOURCE: THE STANDARD BASED ON COMMSCAN DATA
                       Billion-Dollar Buyouts Abound
                      TOP WEB-RELATED M&A DEALS, 4Q00
                                                       VALUE
RANK ANNOUNCED ACQUIRER/TARGET                       (MILLIONS)
  1   Dec. 1   NTT DoCoMo/AT&T Wireless Group          $9,800
  2   Oct. 12  Enel/Infostrada                         $9,500
  3   Dec. 22  Vodafone/Eircell                        $4,100
  4   Nov. 21  France Telecom/Equant                   $3,970
  5   Dec. 8   Tiscali/World Online International      $3,922
  6   Nov. 4   Viacom/BET Holdings                     $3,000
  7   Dec. 20  Ciena/Cyras Systems                     $2,602
  8   Dec. 19  VNU/ACNielsen                           $2,300
  9   Nov. 16  Verizon Wireless/Price Communications   $2,060
 10   Nov. 17  Spirent/Hekimian                        $1,600
 11   Oct. 3   ASM Lithography/Silicon Valley Group    $1,590
 12   Oct. 11  Metromedia Fiber Network/SiteSmith      $1,360
 13   Dec. 22  Microsoft/Great Plains Software         $1,100
 14   Dec. 8   Univision/USA Networks TV Broadcast     $1,100
 15   Oct. 5   Maxtor/American Quantum Cycles          $1,080
SOURCE: THE STANDARD BASED ON COMMSCAN DATA

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